Fashion, the avant garde of Indian retail, is a highly evolved sector. Evolution brings in a multiplicity of issues and opportunities and in an ever-evolving market, what was the top issue yesterday may not be the foremost area of concern today. IMAGES BOF identifies top-issues facing fashion retailers today…
As we end every financial year, and look back at the year that was with hope for the year that will be, it is time to go back to the drawing boards. A wise man once said that he always takes a restart at life at the beginning of every year.
The fashion retail category continues to lead modern retail in India backed by the ever growing dreams of the Indian fashion consumer. The journey of fashion from “need” to “want” and now to “aspire” is truly on its way. Internet retailing and smart phone penetration are leading the aspiration creation and also impacting sales. After gold retailing, menswear leads fashion and kids wear promises the maximum growth. Indeed, what better time than this than to absorb assimilate and successfully ride the many movements and opportunities that lie before the fashion industry.
To find out which exactly are the top-issues facing fashion retailers today IMAGES Business of Fashion did a snap study. First, we spoke to a few retail leaders to help identify the choice set from which the top 10 ten would be ranked. Having identified the choice set we wrote to over a 100 fashion retail leaders to participate in the study. Over 40 retailers responded. We wish to thank all that participated in the study.
In the study conducted last year the Top Issue was “How to Scale Up the Business.” However, this year it has been toppled and “High Retail Rentals” has emerged as the most critical challenge voiced by retailers.
Other top gainers this year were “Low Footfalls” which rose from number 7 to number 4, and “Government Issues: Duties, Rules & Tax Structure”. Clearly it has been a year of intense concerns on margins. On the other side issues that have gone down the rankings include “Calendar planning: Unclear EOSS Periods” (4th ranking went down to 12th) and “Competing in a Saturated Market” (6th ranking went down to 14th). Is it that the retailer has accepted both, as factors that are now part of the game?
“How to Scale Up the Business” emerges as the top issue and “Customer Engagement & Retaining Loyalty” is at No.3, if we combine the rankings for both FY 15 and FY 16. These two are very aptly summed up in the words of Director – Retail Raymond Ltd., Mohit Dhanjal, “The biggest challenge for any fashion retailer is staying relevant to the target group. With the ever expanding array of brands and exposure that consumers have today, it is important that the brands reinvent themselves continuously to stay relevant to the TG. This should not be restricted to only product but also extend to other touch points such as channels of communication, the retail store identity, the customer experience offered at point of sale, etc. With the growing consumption of digital media brands are increasingly going beyond traditional marketing channels and embracing digital especially social marketing into their DNA.”
At this the coming of the omni-channel era there are increasing number of functional areas and multiple customer touch points; each competing for time, eff ort, resources, focus and innovation; success in fashion retailing today is indeed a huge multi-tasking ask. Add on several other dis-synergies, environmental and statutory problems and fashion retail is a jigsaw with a multiplicity of issues to be tackled. Multiplicity demands prioritisation. We hope the study helps in tackling them perhaps better by prioritising them.
High retail rentals are creating havoc for retail brands. The market is taking a hit due to this and eventually when shoppers are not comfortable with driving to far flung locations for their favourite brands, the rescue is online shopping! High rentals are a huge deterrent for brand expansion and especially for niche categories.
Co-Founder and CEO 612 League, Manu Indrayan says, “This is the biggest challenge in kids wear category as rentals are not commensurate with store productivity.”
Senior Manager – Marketing, Pepe Jeans Neha Shah, aptly puts down the perils of high rentals saying, “Lack of quality retail real estate supply coupled with prohibitive legislation has acted as an impediment to the spread of organised retail in India. Compounding the problem of limited investment-grade supply of retail space are high and lack of professional mall management, all of which make for a challenging operating environment for global retailers.”
Director, Turtle Ltd., Shitanshu Jhunjhunwalla, adds, “One of the major challenges being faced in the current market scenario is the rentals being disproportionately higher to the sales ratio in most cities – most malls are struggling due to lack of growth in footfalls which in turn hampers sales and brands struggle with high rentals which keep on escalating.”
Executive Director Monte Carlo, Sandeep Jain, says, “If we compare the rental values vs. sale, we would find that they are in huge disproportionate order.”
Mincing no words, CEO Celio Future Fashion Pvt. Ltd., Rajiv Nair, states, “This is clearly a demand- supply issue. Few quality malls are making a killing and creating artificial inflation in rent which is unviable for retailers. The question is between sales and bottom-line, any business needs both.”
Vice President – Marketing and Business Development Being Human Clothing, Kunal Mehta, makes an interesting observation: “High retail rentals are a push back in finding locations for fashion retailers. Also, higher preference is given to international retailers over domestic retailers.”
Aptly concluding on this, Head of Operations Triumph International, Jennifer Kapasi says, “Inflated rentals in metros and premium locations impact retail profitability and thus indirectly impacts the consumer platforms.”
AN IMAGES BUSINESS OF FASHION EXCLUSIVE STUDY
STUDY LEAD: RAJAN VARMA
RESEARCH & INTERVIEWS: ZAINAB S KAZI & ROSY N SHARMA
The fashion retail category leads modern retail in India, backed by the evolving Indian fashion consumer
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